Stadiums: a Trophy Taxpayers Refuse to Pay For
Backlash against subsidizing team owners spreads even to the home of the Super Bowl champs.
As the home to five professional sports teams, the reigning Super Bowl champs, and American quarterback laureate John Elway, Denver may well be the most sports-crazy city in America. But an improbable rebellion is brewing over the Mile High City's most beloved franchise.
This fall, voters here will be asked to pay the lion's share of costs for a new football field for the Broncos.
Yet instead of eliciting the unquestioning support that many had expected, the ballot issue has opened the door on a fierce debate over a question taking center stage in cities across the US: How far should taxpayers go in earmarking public funds for private sports enterprises?
More and more, fans are getting fed up with sports teams' demands for new arenas built with the public's dime. In cities from Pittsburgh to San Francisco to Minneapolis, there is evidence of a growing backlash against tax-subsidized stadium-building. And as citizens decide whether sports teams are more important than education or transportation, it's a topic with broad implications not just for pro sports, but for society as a whole.
"There are indications that, yes, people are fed up with subsidizing the private enterprises.... It is the classic public-finance issue of our time," says Robert Baade, a sports-stadium expert who teaches economics at Lake Forest College in Illinois. "You have cities where the school system is failing, and yet they're building new sports stadiums."
In Denver, football may be king, but opponents of the proposed sales tax span the spectrum from conservative Republicans to liberal Democrats - and include some die-hard Broncos fans.
In fact, the depth of outrage citizens express over this tax proposal even surprises the group campaigning against it, says Ray Hutchins, a leading member of Citizens Opposing the Stadium Tax (COST). For his part, Mr. Hutchins says, "I'm a Broncos fan. But I'm not a supporter of a bad tax idea."
Broncos owner Pat Bowlen, however, says a new stadium is necessary for the team to remain competitive in this era of rising players' salaries. He says he will be forced to sell the team if he can't secure $266 million in taxpayer funding.
Under the proposal heading to voters in November, a 0.1 percent sales tax would run until 2012 and go toward the estimated $350 million price tag for a new stadium. For the average citizen, out-of-pocket costs would total about $200 over the life of the tax. The Broncos have pledged to kick in $100 million in the form of stadium revenues.
Critics, however, point out that the Broncos aren't putting any money up front, and they argue that the true cost to the public would total $467 million - a figure that includes $131 million in finance charges and $75 million in cost overruns authorized by the proposal.
Many now view the Denver vote as a litmus test for the future of stadium-financing strategies. "If the home of the Super Bowl champions says no, that will be an unmistakable message around the land," says Hutchins.
Ironically, there was little opposition to building a new stadium for the city's baseball team. But observers note that Mile High Stadium - the existing football facility - is still serviceable, whereas no legitimate baseball park had previously existed. Moreover, the Broncos still have a 20-year lease left on Mile High.
Still, many cities such as Baltimore, San Francisco, and Tampa Bay, Fla., are replacing serviceable old stadiums because they are economically obsolete.
"The trend now is that if you want to have a competitive team, you need a new stadium that is designed to generate revenue [through luxury boxes]," says Randy Vataha, president of Game Plan, a Boston-based firm that negotiates stadium deals for pro sports teams. "And if the funding comes from the public, there's a much bigger chunk left over for the team. So every sports team and owner are now trying to get as much public money as possible."
While owners often claim that stadiums are an economic boon to cities, the reality may be more complex.
"On the pro side, to be a major-league city in the US, you have to have a major-league sports team," says Mr. Vataha. "On the other hand, the argument against it is that, in effect, the public is paying the athletes' salaries. And the public is basically financing the appreciation of the team for the owner. So, the owner gets richer, the player gets richer, and the taxpayer pays for it."